How facilities management is moving into the on-demand era

Bruce Abbott, commercial property broker at JLL Corporate Lease Advisory, discusses the changing real estate landscape and how agility has moved from buzzword to business model.

January 28, 2019

Disruption is the name of the game in business today and the commercial property market is not immune. A changing workforce is challenging the traditional office leasing model as the need to be customer-centric, to subscribe to the needs of the end user, has the potential to completely redefine the office market. The growing importance of the human experience in the workplace is creating a new way of looking at office space, and the impact for occupiers and investors is enormous.

A recent report by JLL on the rise of flex space in the corporate environment highlights the fact that ‘while today’s employees want spaces that better meet their needs; tomorrow’s employees will expect it’.   This is not to say we will see a momentous about-turn with all businesses switching to flexible space, but rather a shift that will see a substantial percentage of companies significantly increasing their usage over the next five years.

It’s about thinking a little differently about your work space. No company wants to be considered irrelevant, and providing flexible environments that inspire, stimulate and respond to change is fundamental in attracting and maintaining talent in our fast-paced, global marketplace.

This rapid expansion of flexible office and workspace has everything to do with the way people work. The rise of the mobile and flexible worker who works anywhere, anytime, means that the traditional office now actively competes with a range of alternative locations. JLL’s European research reveals that 56% of employees now work from other company premises at least once a month, followed by working from home (54%), on transport (36%) and in co-working spaces (34%).

The analysis confirms that new generations entering the workforce have different expectations of the office environment. Under 35s, in particular, prefer to move around an office with no dedicated or static desk. They are more likely to work from a range of different locations and to embrace innovative workspace. The open, amenity-rich workspaces and fresh design concepts of the new generation ‘no-fixed’ flex space holds strong appeal.

This supports the global trend of co-working and serviced offices morphing into fluent and flex spaces, and many corporates ensuring that at least some of their real estate portfolio incorporates some flex space. Larger more traditional occupiers are hedging their bets, consolidating their core functions in smart, leaner headquarters but supplementing this with an investment in flex space too. The biggest benefit this offers is options. Whether you are catering for a contingent workforce, project teams involving a mix of employees or just need help initiating a cultural change, access to flex space can add value. This is leveraged further still by improved innovation, collaboration and productivity. Then there is better space utilisation, portfolio flexibility and potential financial benefits, as lease terms are flexible and here is no Capex spend.

Workshop17, a leading co-working provider in South Africa with spaces in Cape Town, Paarl, Sandton and Rosebank, has taken the co-working community and offering to another level. With a philosophy centred around creating a community of members and strategic partners all over South Africa, the WorkShop17 co-working environment has become a coral reef for partners, members and organisations to thrive.  While Workshop17 takes care of basic business needs like Wi-Fi, printing, meeting and office space, the community can focus on scaling their businesses.

These partners, together with their members, bring the community to life by adding tremendous value to their events, seminars, workshops and internships. Members connect with each other and share successes and failures by joining get-togethers and seminars run and hosted by Workshop17 Community Members. “It is not about the space, but about the people in the space,” explains Workshop17 co-founder and CEO, Paul Keursten. “Ours is a space where members and communities can plug into and focus on what matters to them while we take care of the rest.”

European trends indicate that flexible space will grow by an average of around 25-30% per annum over the next five years, with the forecast suggesting that flex space will move towards 5% of total office stock in the time period.

The accelerated growth of this new leasing model is rooted in the specific needs of a corporate audience for a hybrid of private offices and some co-working space.  And the spin-off is clear: the commercial real estate sector has the potential to offer flex space operators more resilient revenue streams and a much larger and stable marketplace, particularly if they can secure relationships at regional or global scale.

JLL’s research supports an earlier prediction that flex space could represent as much as 30% of some corporate portfolios by 2030.